Singapore – According to Transport Minister Khaw Boon Wan, the current transport fares are not able to meet the high costs of operating and maintaining Singapore’s rail networks.

The minister, who was responding to a parliamentary question made by Member of Parliament Sitoh Yih Pin during a meeting on July 8 (Monday), said that the country’s transport operators have been operating at “substantial losses.”

Having been asked for an update on the level of Singapore’s rail reliability and sustainability, Mr Khaw said that losses were being incurred because fare adjustments by the Public Transport Council (PTC) “were not fully implemented” and its formula was not “strictly” followed.

“In practice, as fares have been inadequate to cover the cost of operations, government subsidiaries have exceeded their intended scope of funding the civil infrastructure and the first set of operating assets,” said the Transport Minister.

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“With intensified maintenance to reach the current level of reliability, the government operating subsidies have increased further.”

He said that there is a need to review the formula for determining transport fares once more in the future to shoulder the increasing costs of operating Singapore’s MRT (SMRT) system.

“PTC’s fare formula is supposed to keep fares in line with macroeconomic cost factors such as inflation, wages, fuel costs and increases in the network capacity, with a productivity extraction,” said Mr Khaw during the Parliamentary session.

He noted that failing to follow PTC’s fare formula made the operators unable to cover maintenance costs and “the additional costs have been partly covered by increased government subsidy and partly absorbed by the operators who have already been incurring substantial losses.”

“This is clearly not sustainable,” said the minister.

The costs

To give some insight on the operating expenses involved in running a rail network, Transport Minister Khaw said that between 2016 and 2017, the total operating costs increased by around S$270 million.

SMRT Trains suffered a loss of S$86 million based on the latest reported financial year, while the SBS Transit’s train division incurred losses amounting to “tens of millions,” said Mr Khaw.

He added that the Government had reached S$1.9 billion in expenditure to take over ownership of all rail operating assets.

“While the S$1.9 billion is once-off, the government is now also responsible for the proper and timely renewal of these assets, and this is a huge and continuing financial liability,” Mr Khaw noted.

The Government is expecting to spend S$4.5 billion on operating subsidies over the next five years, on top of the allocated spending of S$25 billion on civil infrastructure used to build and equip new lines.

Due to “rigorous operations and maintenance, disciplined investment and countless personal sacrifices by thousands of public transport workers who have worked day and night to improve the network,” Singapore’s MRT system is now of the same level as other world-class systems such as the Hong Kong MTR and Taipei Metro, said the Transport Minister.

“We have stabilised our MRT service. But we have to sustain these efforts over the long term, in order to prevent problems from gradually building up again,” said Mr Khaw.

“This requires discipline – on the operating side to ensure that LTA (Land Transport Authority) and operators invest in upgrades and preventive maintenance of the rail system long before problems become apparent and serious, and on the commuter side, to implement regular fare adjustments to keep the rail system financially viable and government subsidies under control, so that we can sustain a high quality and affordable public transport network,” he added.